How to successfully integrate internal functions with mobility

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Jackie P. Taylor Executive Director People Advisory Services Ernst & Young LLP

Katrin Razzano Global Mobility & Immigration Head Capgemini Financial Services

Your presenters

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Objectives of today’s session

► What functions are global mobility dependent on to carry out its mission?

► What functions are dependent on global mobility to carry out their mission?

► Who are the stakeholders? ► What are the typical exchanges and deliverables? ► What are the risk and pitfalls when functions work in silos?

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How to successfully integrate internal functions with mobility – Storefront and the Backoffice

Storefront – Perspective of nonglobal mobility functions Backoffice – Where the services delivery happen Organizational goals are common: ► Move the right talent to the right place at the right time ► Compliance ► Cost-efficient operations

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Who are the cross-functional partners?

Global mobility

Treasury, Finance

and Accounting

Payroll Corporate Tax

Internal Audit

Human Resources (HR) and

Legal

Information Technology

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Treasury, Finance and Accounting

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Cross-functional partners – Treasury, Finance and Accounting

► Global mobility depends on these functions to deliver: ► Payments such as automated clearing house, wires and checks to assignees,

vendors, and authorities in various countries/currencies ► Expertise on currency controls and money transfer issues (business to business,

business to individual, etc.) ► Policies, processes service level agreements (SLAs) to authorize these payments ► Policies and technical support for accruals and purchase orders (POs) ► Chart of accounts

► Treasury, Finance and Accounting depend on global mobility for: ► Cash flow forecasts, credits and debits, currency ► Accruals (deferred pay, taxes, vendors) ► Budget vs. actual analysis ► Audit trail, authorizations per their policies

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Cross-functional partners – Treasury, Finance and Accounting

► Example deliverables: ► Cash flow forecast – the global mobility function needs to provide a cash flow

forecast to the Treasury, Finance and Accounting; it is an example of a deliverable to the cross-functional partner/stakeholder to ensure they can be compliant with their internal policies and requirements

► Credit cash flow, typically tax refunds and tax equalization settlement (TEQ) repayments

► Accrual reports are monthly and are typically separate for incurred vendor expenses and taxes

► Risk and pitfalls: ► Payments made late incur interest, penalties, late fees and notices ► Payments held up for currency control ► Attention from internal and/or external audit ► Wreck internal goals for accrual accuracy and cash flow margins

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Payroll

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Cross-functional partner – Payroll

► Global mobility depends on this function to deliver: ► Local, split and shadow payrolls ► Vehicle to remit tax and social security ► Vehicle to collect and settle hypo taxes ► Process for initiating payments and deductions ► Payroll codes that enable required reporting and mapping ► Payroll codes that enable required net payment result ► Global payroll calendar

► Payroll depends on global mobility for: ► Audit trail (authorizations and policy) ► Accurate reporting (inclusion in compensation) ► Documentation (letter of assignment (LoA), certificate of coverage (CoC),

A1s, Form W-4, Form 673)

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Cross-functional partner – Payroll

► Example deliverables: ► Access to forms and CoC (shared folder, access to global mobility system) ► List of all payables and deductions with mapping instructions (reportable, taxable,

non-taxable, home/host tax items, current/prior year tax items, etc.)

► Risk and pitfalls: ► IRS/state, foreign tax authority audit ► Attention from internal/external audit ► Overpayments and underpayments ► Inefficient reporting creating time-consuming reconciliations ► Missed payroll deadlines/cut-offs resulting in off-cycle payroll runs ► Reissue of year-end statements (W-2Cs), wreck internal goals and policies

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Corporate Tax

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Cross-functional partner – Corporate Tax

► Global mobility depends on this function to deliver: ► Clear policy and guideline on the company’s positions for permanent establishment

and transfer pricing, which is specifically important for service industry ► Advice on specific cases as they arise ► Advice on corporate withholding taxes on cross-border intercompany charges

► Corporate tax depends on global mobility for: ► Being the first line of defense for permanent establishment (PE) and transfer

pricing (TP) issues ► Documentation that uphold and substantiate the PE positions taken ► Timely head count (HC) transfers for costs to record on the right entities books ► Correct state-to-state head count reporting for corporate state income tax purposes

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Cross-functional partners – Corporate Tax

► Example deliverables: ► Continuously update corporate tax on the pipeline of assignees and transactions to

enable corporate tax to give advice/limitations ► For PE purposes, keep and share day trackers for assignees ► Letters of assignment that explicitly substantiate PE positions ► Ensure timely implementation of shadow payrolls, etc. ► Ensure intercompany agreements (ICAs) reflect the TP positions and agreements,

if any

► Risk and pitfalls: ► Assignees creating PEs around the globe ► TP audits and assessments ► Erroneous corporate income allocations to states

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Internal Audit

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Cross-functional partner – Internal Audit

► Global mobility depends on this function to deliver: ► Independent review of compliance with laws and regulations, as well as internal

policies ► Advice on areas of opportunity for improvements ► Validation of current organization, processes and execution, as well as

sufficient resources to carry out mission in compliance

► Internal Audit depends on global mobility for: ► Providing requested documentation of policies, processes descriptions,

standard operating procedures (SOPs), etc. ► Providing substantiation of the above

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Cross-functional partner – Internal Audit

► Example deliverables: ► Complete assignee documentation, signed authorizations, signed letters of

assignment, signed exception approvals, copies of TEQ summaries, collection requests, paid and received checks, etc.

► Risk and pitfalls: ► Language/terminology differences; before starting the process educate each other

on definitions and terminology ► Internal Audit issues may cause the leadership and stakeholders to lose confidence

in the function

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HR and Legal

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Cross-functional partners – HR and Legal

► Global mobility depends on these functions to deliver: ► Support with immigration documentations ► Support with on and off boarding ► Advice on balancing compensation and benefits policies versus local statutory

laws and regulations ► Advice in disputes ► Timely notice on terminations

► HR and Legal depend on global mobility for: ► Visibility to employee movement ► Tax implications of employee assignments and transfers ► Succession planning and talent optimization strategy ► Ensure compliance with local requirements and training ► Performance management stakeholder involvement

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Cross-functional partner – HR and Legal

► Example deliverables: ► Performance management process, legal compliance training, collaborative process

flows – user experience (Ux), handling of split payments (compensation) and compensation planning

► Risk and pitfalls: ► Assignees claiming local statutory benefits not budgeted for by the company ► Severance payments being taxable in the host country ► Local statutory notice periods and severance payments becoming applicable ► Relocation costs becoming taxable ► Internal Audit issues may cause the leadership and stakeholders to lose confidence

in the function ► Less than optimal employee experience ► Inconsistent HR practices ► Legal compliance/training gaps

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Information Technology

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Cross-functional partner – Information Technology

► Global mobility depends on this function to deliver: ► Interface capabilities and linkage to core enterprise resource planning (ERP) data ► Review and assessment of technology capabilities/vendors

► Information Technology depends on global mobility for:

► Geographical representation of employees ► Visibility into employee movement and assignments ► Compliance and restrictions

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Cross-functional partner – Information Technology

► Example deliverables: ► New system selection and implementation, EU data privacy assessment,

stakeholder role in projects

► Risk and pitfalls: ► Unreliable or no access to key global systems ► Violation of data privacy laws ► Works council approval issues ► Multiple technologies leverages with no integration ► Increase cost for technologies

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Summary

► Successful integration across functions helps to avoid risk. ► Technology is a key component to communication across functions and to

ensuring access to global information in a timely manner. ► Global mobility should play a key role in IT purchase decisions and an

organization’s business process reengineering projects. ► Employee experience is directly impacted when global mobility teams are not

included as a stakeholder.

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Any questions?